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Don’t Be Mislead By the Vote to Cut Off RRP Enforcement Funding

On July 13, 2011 the House Appropriations Committee voted to cut off funding for enforcement of the RRP Rule until a reliable test kit is recognized by EPA. The amendment was included in the House Appropriations Bill by Representative Denny Rehberg (R-Mont.).

Note: For clarification, a “reliable test kit” means a test kit that would be able to determine if a painted or coated surface contains lead equal to or in excess of 1.0 milligrams per square centimeter (mg/cm2) or 0.5% by weight. The current test kits will reliably indicate whether the surface contains any lead or not, but do not measure the amount of lead.

Unfortunately, as a result of the vote many renovators are now assuming that they no longer need to comply with the RRP rule and do not have to use lead-safe work practices on pre-1978 target housing and child occupied facilities. If you are a renovator making that assumption it would be a big mistake that could cost you big time. Let me explain.

First, any cut or stoppage of enforcement would only apply to states where EPA administers and enforces the rule. It would not have any effect at all in those states that have assumed administration and enforcement of the rule from EPA.

Regarding the vote, it is an amendment added to a proposed bill which must go before the full House and Senate for approval. Even if approved in the House and Senate it must then be sent to the president for his signature before passing. The president signing it, at least in my opinion, is not very likely. Obama had a lot to do with why the rule exists to begin with.

Even if the amendment to the rule were to go into effect, all it would do is take away the money EPA has to fund enforcement. It would not eliminate the rule. If and when a reliable test kit were to be eventually recognized by EPA, and finally made it to the marketplace, enforcement funding would then become available again.

EPA can eventually get you anyway: Keep in mind that the rule requires that renovators keep all required documentation and that it be available for EPA audit for 3 years. That means EPA can retroactively enforce the rule 3 years back. If and when enforcement happens, all EPA needs to do is ask to see a renovators documentation to determine whether all the regulated work performed during that 3 year period was properly documented, met the rule’s requirements and that property owners and/or tenants received the required Renovate Right pamphlet, any lead testing results documentation as well as a copy of the required renovation checklist. Remember, the fine is up to $37,500 per violation per day!

Property Owners, Tenants and Parents can get you anytime: Also, keep in mind that even if EPA can’t or doesn’t enforce the rule, your customers, their neighbors and the parents of children attending a child occupied facility can still sue you for not following the law. And, as a business, if accused, you are considered guilty until you prove you and your business is innocent at your own expense, money you cannot recoup in court.

Plus, one fact that many business owners may not be aware of is that, under the rule, the business owner can be held civilly liable for violating the rule. Don’t assume you are personally protected just because of the legal status of your business.

Now, RRP Renovators Can Keep An Eye On Big Brother!

Many renovators have expressed concerns about what the EPA is and/or will be doing regarding enforcement of the RRP Rule. Those who are operating illegally are concerned that EPA may find them and inspect, those who are abiding by the rule are wondering when EPA will do inspections and catch their illegal completion. Now, thanks to the folks at Check4Lead, renovators have an on-line tool to report and view EPA RRP Inspections across the country. Essentially, the tool allows renovators to keep an eye on “Big Brother”.

The new tool, called EPA Audit Tracker, allows visitors to view the locations of EPA and OSHA inspections related to RRP on a Google Map. Pin drops appear on the map to mark the location of audits and a variety of different pin drops are used to distinguish between the government agencies doing the audits. The tool has just been released, so there are not a lot of pin drops yet. I suspect that will change quickly as renovators become aware of the tool and contribute.

The tool is very easy to use. To report an audit, users can click on the report icon to open a reporting screen. When the reporting screen opens there is a text box call “your Story” where visitors can report the audit, share details of the audit and express their opinions. A zip code field is used to locate the pin drops on the map and a valid e-mail address for the person posting the report is required.

Scott Turman, an owner and product manager at Check for Lead LLC tells me that reports will be manually reviewed for validity and appropriate langauge before being posted to the map. He also told me, using the required e-mail address; his staff may actually contact the person reporting the audit to verify the report. After the pin drop is added, visitors can click on the pin drop to view the report.

In my opinion this tool will be helpful for those renovators following RRP requirements for a variety of reasons. For example, it will help level the playing field for legally operating businesses if the awareness of audits persuades illegal businesses to change their ways. Because the tool allows those reporting audits to include details about the audit, renovators will learn what to expect and how to better handle an audit if one happens to them. Also, for those who like to help their peers, being able to submit a report that is informative and shares constructive advice becomes a win-win for both the reporter and those who read the reports.

On the other hand, the tool will not likely be helpful to those who knowingly and willfully violate the rule. Knowing where EPA, OSHA and/or states agencies are doing inspections or audits won’t be much help in hiding from an inspector. As we have seen, job site inspections are not likely. Removing magnetic signs or parking their trucks out of view won’t protect violators from an audit. The required documentation gives the authorities the ability to retroactively inspect work practices as well as compliance with owner and occupant pre-notification requirements. Because the EPA rule dictates that all required documentation be kept for three years, one visit to a renovator’s office by EPA can uncover enough violations and justify enough fines to put an illegal business out of business. The Massachusetts requirement for storing documents is 10 years, giving illegal businesses in that state much more to be worried about.

I commend the folks at Check4Lead for providing this tool. In addition to the tools, supplies and compliance colateral they offer at their web site, the EPA Audit Tracker Tool will definitely ultimately help renovators comply with the rule, improve their ability to prove compliance and give them insight on handling an audit.

Is The RRP Rule “Outdated And Harmful To The Economy”?

A New York Times story today reported that President Obama has ordered a top-to-bottom review of federal regulations to get rid of rules that are outdated and harmful to the economy. Is the current RRP Rule based on outdated research and is it harmful to the economy? Many in the remodeling industry think so and have been beating that drum for some time now. Perhaps this is just what the remodeling industry needs to help get rid of the current RRP Rule in favor of one that is up to date and protects legally operating businesses.

According to the story Obama signed an executive order today that would step up oversight of the regulations issued by government agencies such as U.S. EPA and the Interior Department.

Here are a few promising excerpts from the executive order, let’s hope the president really means what he signed:

“Section 1. General Principles of Regulation. (a) Our regulatory system must protect public health, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation. It must be based on the best available science. It must allow for public participation and an open exchange of ideas. It must promote predictability and reduce uncertainty. It must identify and use the best, most innovative and least burdensome tools for achieving regulatory ends. It must take into account benefits and costs, both quantitative and qualitative. It must ensure that regulations are accessible, consistent, written in plain language, and easy to understand. It must measure, and seek to improve, the actual results of regulatory requirements.”

“To the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt”

“Identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public.”

“Regulations shall be adopted through a process that involves public participation. To that end, regulations shall be based, to the extent feasible and consistent with law, on the open exchange of information and perspectives among State, local, and tribal officials, experts in relevant disciplines, affected stakeholders in the private sector, and the public as a whole.”

“Each agency shall also seek to identify, as appropriate, means to achieve regulatory goals that are designed to promote innovation.”

“Sec. 6. Retrospective Analyses of Existing Rules. (a) To facilitate the periodic review of existing significant regulations, agencies shall consider how best to promote retrospective analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.”

Perhaps industry trade associations can take advantage of this executive order to get EPA to rethink the current RRP rule. To protect the interests of renovators, at a minimum, the RRP Rule or any proposed amendments should reflect real scientific facts about EBLL’s caused by RRP activities and address the economic challenges currently being experienced by compliant businesses that have been complaining about illegal and unfair completion due to the lack of enforcement of the RRP Rule by EPA.

Based on the executive order, perhaps the EPA will also be forced to track, measure and report on the actual effectiveness of the rule in accomplishing specific performance outcomes. If performance outcomes are specific and clear, I suggest a revised rule could not only better address the lead poisoning of children due to RRP, it could also assist in fostering innovative methods and tools that would help our industry reduce the cost to do so; for businesses and the consumer.

RRP Enforcement Has Started, But You Ain’t Seen Nothing Yet!

Legitimate and professional contractors seeking to level the playing field of doing business have been expressing their desire for enforcement of the new EPA RRP rule. Their biggest gripe has been that those not following the rule maintain a pricing advantage because those who do comply must include the additional related overhead, material and labor costs. This concern is further validated because the EPA so far has done little in the way of enforcement.

It will take time, but enforcement is on the way. Momentum in this area will likely be caused by the residual effects of the RRP rule, not because the EPA chooses to ramp up its enforcement efforts. Contractors and the EPA better get ready though. Catalysts like the ones listed below are coming and will force contractors to comply. At the same time these catalysts will increase the number of violations reported to and requiring action by the EPA and or by those states that have assumed administration and enforcement of the rule.

The list below includes titles for several other articles previously posted to RRPedia. Clicking on the titles will bring you to that article. Rather than make this article extremely long, readers can pick and choose which articles they would like to read. If you choose to read all or most of the articles, I suggest reading them in the order listed below.

Banks And Other Lenders Are Starting to Find Out About the EPA RRP Rule Too.

Banks have started to figure out that the costs and liabilities related to the EPA RRP rule can dramatically increase their costs and risks. Banks that own foreclosed properties have quickly discovered the additional costs they will incur when repairing and or renovating these properties just so they can sell them. Under the RRP rule, landlords need to become certified firms and use certified renovators when working on their properties. Banks who take possession of pre-1978 properties need to do the same and or only hire certified firms to perform the work for them. As a result of the RRP rule, many pre-1978 foreclosed homes are now worth less than they were valued prior to the April 22, 2010 date the new EPA RRP rule took effect.

Banks are also more likely to end up with additional foreclosed properties due to the RRP rule. For struggling pre-1978 homeowners and investors, perhaps already upside-down on their mortgages, the additional repair and maintenance costs related to the EPA RRP rule may be just one more reason to justify letting their properties go to foreclosure. Finding out about the potential additional drop in equity value in the property due to the EPA RRP rule may become a second reason to let upside down properties go to foreclosure.

As mentioned above, banks have already started to become aware of the EPA RRP rule due to foreclosures. They are also using this knowledge when considering loans. If loaning money to home buyers for purchases and or to property owners for renovations, banks will likely want to know if a pre-1978 property contains lead and if it does how it might affect the value of the home. A home needing significant repairs or maintenance after purchase will likely have a much lower value if the work will fall under the EPA RRP rule. Such scenarios might have a few different effects ranging from requiring more money down, higher interest rates, lower appraised value of the property as compared to the selling price and or ultimately denying to loan money on the property.

CT NARI Chapter Advises Membership How To Report RRP Violations

While at the Remodeling Show last week in Baltimore a CT remodeler shared with me that his local NARI Chapter, The Remodeling Contractors Association of Connecticut, had e-mailed out information to its membership about how to report violations of the RRP Rule to the EPA. The e-mail included a PDF form created by the Region One EPA office as well as a link on the EPA site that could be used to report violations.

Although every “legal” remodeler I have spoken to expresses concerns about illegal competition doing their work in violation of the RRP rule, these remodelers are split about whether to report their illegal completion or not. At the Opening Session I presented on Thursday morning at the Remodeling Show I offered my point of view on this. I suggested that illegal contractors and the home owners who hire them are stealing business and money away from legal remodelers and their employees. I gave the example that if you or I steal a TV from someone and get caught, we must return the TV and suffer any consequences. If an illegal contractor or home owner steals a deck job from a legal contractor little or nothing is ever done and the home owner gets to keep the deck. How long will our industry and the trade associations that represent us tolerate this? Just like with illegal immigration, because our government does not enforce existing rules and laws on a consistent basis, illegal contractors operate with little fear of being caught and even if caught, have little fear of any consequences.

The reporting of illegal contractors is every contractor’s choice. In a recent survey I created for Remodeling magazine the following question was asked.

The survey was first sent out to the magazine’s reader panel. 157 people responded to the survey results shown above. The numbers in the pie chart tell an interesting story. Only 16% of those who responded indicated they would not report a contractor operating in violation of the RRP rule. Just over half are still trying to decide.

As we all wait to see what happens with the economy and how long a real recovery will take, I predict that their ability to pay their mortgage and put food on the family table will persuade many remodeling business owners to take action and defend their ability to run honest businesses.

Home Inspectors Will Help Spread The News About The EPA RRP Rule

If home buyers aren’t aware of lead paint or the implications of buying a property that has or may have lead paint, a good home inspector may likely provide such knowledge.

In April this year I did a presentation about lead and the new RRP Rule for the New England Chapter of the American Society of Home Inspectors (ASHI New England). Ironically, the meeting was scheduled for Earth Day, the same day the RRP rule went into effect. At this meeting I informed the inspectors not only about the required EPA RRP lead –safe work practices, but also about the health effects of lead and the required documentation that home owners should receive on completion of a renovation if the property was built prior to 1978. The inspectors were quick to connect the dots between identifying recent renovations and suggesting to the buyer that they ask the seller for a copy of these documents.

In my experience, home inspectors, particularly ASHI members, are typically a very detailed and knowledgeable group of professionals who seek to constantly increase their knowledge. In fact, to maintain their membership in ASHI, members are required to obtain continuing education credits. Home inspectors separate themselves from their completion through their knowledge and expertise and use these advantages to better serve their clients. Home buyers have home inspections performed prior to a purchase as a way to not only identify the condition of a home, but to also identify any health and or safety issues the home may have. Good home inspectors should have knowledge about the EPA RRP rule and will share this information with their clients.

Home inspectors will help cause compliance with the EPA RRP rule in a few ways. First, they will likely make home buyers aware of the fact that if built before 1978, the home may likely contain lead paint. The only way to verify if lead paint is present is to do a lead test. Inspectors can suggest their clients ask the seller if the home has been tested and if it has to obtain a copy of the required lead inspection report. Next, if the home does have lead, or it hasn’t been tested, inspectors should inform the buyers that any renovations to the home would need to be done using lead-safe work practices. This will have two effects. The first would be to let the buyer know that lead-safe work practices are required should they be planning any renovations after purchasing the home. Second, and most critical, would be to verify that any recent renovations done at the home were done using lead-safe work practices and to verify this by making sure who ever did the work did it in compliance with the EPA RRP requirements. Again, requesting a copy of the required documentation will be the best way a buyer can confirm how such renovations were completed.

Additionally, if the work was done by the home owners themselves, or perhaps was done illegally by a non-complaint contractor, the only way to find out if the work may have contaminated the home with lead would be to have the home tested by a licensed lead inspector. This is likely to create heartburn for both the seller and the realtors involved in the sale. Federal disclosure rules about lead require that if a home is tested, the required lead test report must be disclosed to any buyer or anyone planning to rent or lease the property. Failure to do so would result in serious legal liabilities for the seller and also for the realtor should the realtor be aware of the testing. If the seller refuses to allow testing, the buyer may just walk away from the purchase and has the legal right to do so.

As the above described scenarios take place during real estate transactions, I predict home owners, home buyers and realtors will all become more and more aware of the EPA RRP rule. Each, and for their own reasons, will likely become frustrated and or disappointed. All will share their frustration and disappointment with someone else. Its only human nature to do so. This will result in spreading the word about the EPA RRP rule and will contribute to the reporting of violations and the enforcement of the rule by either the EPA and or those states that have assumed administration and enforcement of the rule.

City Officials Drop The Ball On RRP Rule. Will City of Racine WI Be Fined?

In a September 20, 2010 article by the Racine Post in Wisconsin, the on-line news web site provides a very in-depth report about RRP violations on city financed and managed renovation projects. The article serves to demonstrate and validate the challenges law abiding and conscientious businesses have when trying to work within the RRP rule. A combination of illegally operating contractor competition as well as ineffective, under-funded and or non-existent enforcement has made earning a living challenging for legitimate business owners as well as the employees who work for these businesses.

Wisconsin is one of the states that has assumed administration and enforcement of the EPA RRP Rule. The article reports that Bill Bielefeldt alerted the Wisconsin State Department of Health Services about unsafe lead practices on city-owned homes. Racine's Neighborhood Stabilization Program (NSP) is designed to renovate and sell rundown homes in foreclosure. The article includes a photo gallery of pictures showing a variety of violations at the projects being managed by the city.

Bill Bielefeldt is a housing technician for the city of Racine. He received an award from the Wisconsin Rental Housing Legislative Council for his work on lead-safe practices. (Photo by Racine Post)

Bielefeldt claims the city program meant to improve neighborhoods may be endangering children. "It's embarrassing that the city isn't following its own rules and concerns", Bielefeldt said. "I would be just as much at fault as they are if I didn't report that," he said. "I didn't just go blindside them. I told them about this, and they chose not to do anything."

Now, the city is facing major violations for creating potentially hazardous conditions. The city's response to Bielefeldt? The Racine Post reports the city sent two uniformed police officers to Bielefeldt's Mount Pleasant home just before midnight on Sept. 17 to deliver a letter saying Bielefeldt was prohibited from all of the city's NSP sites.

Here's the letter the city delivered to Bielefeldt just before midnight:

Mr. Bielefeldt; It has come to my attention that you have been on city-owned property without authorization. Pursuant to your suspension of employment beginning September 10, 2010, you have been relieved of your duties as a Housing Technician as of that date. Be advised that You are not to enter any city-owned property under the control of this department, including but certainly not limited to any homes that are now or are in the future in the Neighborhood Stabilization Program.

Further, you are not to contact any property owners participating in the city's loan program or any related programs, such as downpayment assistance, and you shall not represent yourself as a current City of Racine employee during the course of your suspension and/or upon termination. As was said to you on September 10, 2010, any requests for information from this department must be made directly to me for response.

Failure to comply will result in the city seeking all civil and criminal remedies available to it. Signed, Brian F. O'Connell Director of City Development

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I predict we will hear many more stories similar to this one as more contractors become frustrated with illegal completion and the public becomes aware of the dangers of lead paint as well as how the RRP rule will affect them and renovations at their homes.

Property Values and Equity Will Drop as a Result of the EPA RRP Rule

Home buyers, investors and realtors will likely drive awareness about lead and the new EPA RRP rule up. But, at the same time, such awareness will drive the values of pre-1978 properties down. If unaware of the additional considerations of risks, liability and costs related to the RRP, realtors will likely walk into a hornet’s nest.

Some home buyers and investors use realtors acting as buyer brokers to assist them when purchasing property. If making buying decisions based on property pricing and the costs related to bringing the properties they purchase up to par with their desires, these buyers will not be happy if they are blindsided by the RRP rule. These buyers will also be very unhappy, and may consider legal options, if they feel their realtor should have advised them about such considerations during the buying process.

A buyer’s willingness to purchase a property that contains lead will definitely be effected as a result of the RRP rule. First, once word gets out, the health risks of lead paint and related liabilities will cause many buyers to bypass any consideration of pre-1978 properties. As the supply goes up, the prices of these properties will go down. Also, investors won’t like the added costs of owning such properties, particularly if the value of those properties is less likely to increase over time as compared to properties without lead. This too will lower property values to a point where the value of certain properties may only be in the land they sit on, less the cost to get rid of the original lead infused structure.

As a result of the RRP rule, I predict home sellers and realtors will get into uncomfortable negotiations with buyers, and as a result, even some challenging conversations between themselves. Let’s just say the asking price for a pre-1978 property is $280.000. I picture scenarios where a buyer will make two different offers for that property. One offer will be close to the buyer’s asking price, say $270.000. But, the offer will be conditional upon testing the home for lead to confirm no lead is present. The second offer will be much lower, say $240.000. The second offer will reflect the additional costs and risks the buyer feels they will be assuming if the home does have lead and or the seller isn’t willing to allow testing for lead. In the negotiations, realtors will likely become the punching bag, as buyers and sellers typically never interact, but rather the realtor acts as the middleman. If the seller is first finding out about lead and the RRP as a result of the offer, as mentioned above, that seller might not be happy with their realtor either.

As a side note, realtors as a whole are typically much more professional and proactive than contractors. The majority of them are also dues paying members of one single, well funded and very powerful trade association that represents their interests. I predict that once a good number of realtors catch wind of and understand how the RRP will affect their industry; their association will be working to modify the rule in their favor. This might be of benefit to renovators, but just as easily, it might not.

Renovators And Their Trade Partners Will Need To Work Out And Agree On Who Will Do What

Many contractors seeking to comply with the new EPA RRP rule are reporting concerns and challenges about finding trade partners who are willing to operate in compliance. Many renovators have told me that their trade partners have flat out refused to get their businesses and workers certified. Others have said their trade partners have committed to do so but have been slow to get it done due to the related costs. This has become quite an opportunity for some trade partners who have become certified and are marketing their certifications and services to general contractors. Several are actually offering to sub-contract the set-up, containment, demo, clean-up, cleaning verification and all related and required documentation for general contractors.

A surprise to me, but also a no-brainer, was one electrician’s comment that he was having problems finding general contractors to work for who were in RRP compliance. Just as general contractors need to find new compliant trade partners to work for them, many trade partners are finding they can no longer rely on the volume of work they got in the past from contractors if those businesses choose to operate illegally.

Liability risks may also drive compliance. Renovators and their trade partners will need to work out and agree on who will do what. Here are a few examples:

Who will take care of the notification requirements and documentation of same before the job begins? Under the rule, either can do so, but the business under contract with the property owner must maintain the required documentation.

If a trade partner or his employees are not certified renovators, will the renovator take on the responsibility of training and supervising the trade partner and or his employees? If so, at what level of risk? And, will either business’s insurance company allow such a relationship in the future?

Who will create the required renovation checklist?

Who will make sure the homeowner and or tenant receives a copy of the required renovation checklist after completion of the work?

In Massachusetts, who will maintain the required log documenting who comes in and out of the containment area during the course of renovations?

The first time a RRP fine is accessed for a violation the finger pointing will start, causing one or both businesses to get serious about certification and compliance. The first time a renovator is sued by a client or neighbor as a result of the actions of a trade partner, the tactics used by the lawyers will cause both businesses to have a new and different outlook on RRP compliance, insurance coverage amounts and indemnification clauses. Attorney Mike Sams of Kenney & Sams, P.C., told me that failure of a business to be properly certified under the RRP rule on its own is evidence of negligence should a homeowner or insurance company take the contractor or trade partner to court. Taking this a little further, a contractor hiring a non-certified trade partner might also be considered negligence if that trade partner is allowed to work unsupervised.

To confuse matters even further, under their definition of the difference between an employee and an independent contractor, the IRS says that a contractor cannot supervise the work or workers of a sub contractor. Doing so might result in the IRS labeling the sub contractor as an employee. If this were to happen it could trigger addition payroll taxes and workers compensation costs for the general contractor.

I just wanted to say thank you for your efforts to keep us informed.

"Thank you again for the hundreth time for keeping a vigil on this business nightmare. Your site is one of the best resources we have to stay on level ground"

Christian Peter

"I am quite impressed with all the confusion out there at Shawn McCadden’s clear and concise voice that continues to help contractors and those involved in this industry truly understand the rule. His efforts should be applauded."

Christopher Wagner, LBPFiles

"RRPedia is an accurate and contractor friendly interpretation of the very complex and confusing EPA RRP rule"

"Thanks for taking the time to write the blog. It's about the only place one can go to get some serious info on this dreadful subject"

"I would like to begin by thanking Shawn for all of his postings and education that he has been sharing with the remodeling industry. He has personally been extremely helpful in guiding me through various interpretations of the RRP rule, his advice and knowledge are priceless."

Michael A. Mahoney

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